A Crash Course on 3 of the Most Common Lease Types

By: Sylvia Clubb, GreatAmerica: If the world of financing and leasing seems like a confusing landscape of options, you’re not alone. Approaching the industry with little to no financing experience can be overwhelming for anyone trying to introduce financing as a viable option for their business.

Like anything new, it’s helpful to understand the nuts and bolts of financing: at GreatAmerica, that’s an introduction to our most popular equipment/software lease types in use by businesses today. We’ll look at the pros and cons of each so you can identify which one is best for your business and your customers.

$1 Buyout 

The Dollar Buyout lease is what most businesses are familiar with – it’s classic, straight-forward, and easy to understand. In this lease type, the customer owns the equipment at the end of term, and they may be able to write off the entire cost of the equipment in the first year under the Section 179 and Bonus Depreciation deductions. Your customers’ tax advisors can explain the nuances of these two tax breaks and how they best fit each situation. The $1 buyout lease has the highest monthly payment compared to other leases.

However, this lease may not be the best choice if the customer has intentions to upgrade their technology as the world changes around them. Nowadays, many businesses would rather upgrade their technology at the end of the term rather than be stuck with something outdated.

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SOURCE GreatAmerica

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